EAL Became 1st Share of MOR of Aviation after IPO
Legend Harvested New Success



On June 9, China Eastern Airlines Logistics Co., Ltd. was listed on the main board of Shanghai Stock Exchange (EAL, 601156 SH), becoming “the 1st share of mixed ownership reform (MOR) of aviation”. This marks that EAL, being one of the 1st batch of pilot businesses countrywide and the 1st pilot business from civil aviation sector in the MOR program, has gone through the “3-step” reform journey in a beyond-expectation manner and grown into a public company.

As a critical part of the reform in China Eastern Airlines Group (CEAG), EAL’s MOR has been designed to take the lead and speed up growth. After EAL was enrolled in the list of the 1st batch in September 2016, CEAG established its “3-step” strategy to promote the reform in EAL.

Step 1, equity transfer. CEAG set up an industrial investment firm - China Eastern Airlines Industrial Investment (CEAII) - and transferred its 100% shareholding in EAL by way of non-public equity transfer agreement. In November 2016, EAL was divested from the listco.

Step 2, capital increase. In June 2017, EAL introduced five non-State capitals, namely Legend Holdings, Zhuhai Pudong Logistics (GLP), Deppon Logistics, Greenland Financial Holdings, and Beijing Legend Capital, through the Equity Exchange, and launched its core-employee shareholding program simultaneously, thus kicking off the full implementation of MOR. Together with the introduction of capital, synergetic power and upgrade enablers of industrial value chain were also brought in, producing a magnified driving force and influence of state-owned capital in the market.

Step 3, listing. EAL changed its nature to a company limited by shares in December 2018, therefore completing its shareholding reform. In June 2019, EAL submitted a formal listing application to China Securities Regulatory Commission (CSRC). It passed the review on March 11, 2021 and obtained an approval for the initial public offering on May 7, thus carrying out the ‘3-step’ MOR successfully.

Ever since the MOR, EAL has kept extending its business line to both ends by vigorously developing new business such as cross-border e-commerce solutions, inter-industry project supply chains, aviation special cargo solutions, direct-to-origin solutions as well as launching new projects such as airport industrial parks, ‘port-to-port’ time-limited product offerings, air-rail combined transport services, and one-stop air service centers.

As of the end of 2020, China Cargo Airlines, a subsidiary of EAL, has 10 cargo planes and 725 passenger planes as freight transport resources, which, relying on the SkyTeam, code sharing and SPA agreements, has formed a network with routes reaching 1,036 destinations in 170 countries. EAL owns 17 self-run cargo stations in the country and has built a global air cargo network that has been playing an active role in helping with the ‘Belt and Road Initiative’, serving the country’s regional development strategies, promoting domestic-international dual-circulation, stabilizing supply chain to industries as well as supporting pandemic prevention globally.

From 2016 to 2020, EAL's operating revenue increased from 5.837 billion to 15.11 billion, with an average annual growth of 26.84%; total profit went from 485 million to 3.638 billion, up by 65.48% each year; debt-to-asset ratio dropped from 85.88% to 37.39%, and net assets also jumped out of the mire of ‘out of 10 years, 9 were in loss’ by rising 6.72 times. EAL has enhanced its vitality, profitability and risk-resistance capability significantly, hence accumulating replicable and promotable experience for SOEs in their ownership reform.

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